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  • 标题:The Myth of Democratic Failure: Why Political Institutions are Efficient.
  • 作者:Yoon, Yong J.
  • 期刊名称:Southern Economic Journal
  • 印刷版ISSN:0038-4038
  • 出版年度:1997
  • 期号:April
  • 语种:English
  • 出版社:Southern Economic Association
  • 摘要:First, the author does not recognize the fundamental difference between market and political processes. A market involves bilateral (unanimous) exchanges; a political process involves complex exchanges. A market for political services involves the question of legitimacy as well as efficiency.
  • 关键词:Book reviews;Books

The Myth of Democratic Failure: Why Political Institutions are Efficient.


Yoon, Yong J.


By eliminating Plato, economists have already achieved a lot in improving our understanding of political process. Buchanan and Tullock initiated the interpretation of political process as exchange of interests (and values) rather than search for truth. In this book Wittman attempts to remove David Hume. Wittman asserts that democratic polity is as efficient as the economic market and proposes an efficiency hypothesis of political market. The author makes interesting arguments that deserve attention, but has failed to solidify the issue.

First, the author does not recognize the fundamental difference between market and political processes. A market involves bilateral (unanimous) exchanges; a political process involves complex exchanges. A market for political services involves the question of legitimacy as well as efficiency.

Now, for the sake of argument, let me accept his assertion and examine the implications. A democratic political market is efficient. Thus all we can do is to improve the management. This leads to a question of importance in political philosophy. David Hume asks whether there is any essential difference between one form of government and another - is whatever is best administered the best? Hume's conclusion is that the constitution matters. In this respect, Wittman's argument gives in to an evolutionary theory of political system. Efficiency can be discussed within the given framework of constitutions that restricts political processes. Wittman's efficiency hypothesis belongs in this category.

To justify his efficiency hypothesis, Wittman examines factors of market failure factor or the players in the political market: voters, bureaucrats and interest groups. Wittman emphasizes the role of candidates. Down's "Rational Voter Ignorance" is discussed in detail. Nobody collects the necessary information in Downs. In Wittman all necessary information is collected by the voters or provided by candidates. This argument has merit by introducing endogeneity in political processes; Wittman considers the supply side of political services (candidates) as well as the demand side (voters).

But Wittman's argument leads to another extreme regarding the opportunism of elected officials. He argues that self interest leads to efficiency. He argument is largely based on the politicians' concern about reputation. Again, political markets work differently from economic markets. As Hume says, "Honor is a great check upon mankind: But when a considerable body of men act together, this check is, in a great measure, removed: since a man is sure to be approved of by his own party, for what promotes the common interest; and he soon learns to despise the clamors or adversaries. . . . The whole senate acts as if it contained not one member who had any regard to public interest and liberty." Wittman's argument would be more convincing if he could convince Hume first.

Wittman gives insightful interpretation of cognitive psychology in Chapter 5. The collection of anomalies discovered by cognitive psychologists is not a basis for a coherent theory. Wittman's argument is correct if voters in the political market try to learn from others who are successful. Sifting is an inexpensive process of acquiring information. But there are findings in psychology that can contribute to economics and political process. Works by Ainslie on preference change provides examples.

Wittman applies his efficiency hypothesis to several economic issues. His arguments are not convincing as I demonstrate with the following examples.

(a): Based on the Ricardian argument, he asserts that federal debt is efficient. In his example land is the only tax base. If debt is issued for example, in the amount of one million dollars, then the value of land drops by the exact amount of one million dollars, The value of land falls by optimally discounting the future, and the current generation bears the full consequence instead of delivering the burden to the future generation. This argument ignores the fact that current taxpayers do not know their tax base or rates in the future. Thus, Ricardian equivalence holds only if debt is determined concurrently with the plans for future bases and rates for each individual.

(b): In the voting model (Chapter 11 and 12) Wittman argues that candidates will choose a position (allocation) from the Pareto efficient set. But Wittman and Baron further argue and predict a unique position. Their result relies on the assumption that voting can be repeated; expecting this, all voters will agree on the equal division of the pie. One can apply Rubinstein's perfect equilibrium concept to derive the result. But this exercise misses an important aspect of voting. Voting is certainly a kind of exchange, but since the vote outcome assumes legitimacy, it requires additional costs to repeat. Thus, a successful coalition will enjoy the outcome at the expense of the minority.

(c): To assert the efficiency of regulation, Wittman discusses a farmers' coalition being blocked by trade restriction of cheap farm equipment, etc. Pressure groups and interest groups are efficient to a certain extent because they provide information for the legislators and reduce transaction costs. His point is that no interest group can monopolize protective regulation. But this interest group politics will generate an umbrella of protective regulations which will harm each and all. Wittman's efficiency hypothesis is no answer to the problem pointed out by Hayek, Stigler and Buchanan.

Wittman claims he is proposing his efficiency hypothesis against the conservative economists who proclaim political market failure. Does he consider Hayek as a conservative? Hayek definitely falls in his category of conservative. The book registers the lingering doubts and allows us to see the potentials and the limits of the efficiency of political process. But some fundamental points are missing because the constitutional failures pointed out by Hayek and Buchanan are not discussed. Wittman's criticism of what he calls conservative schools is too weak in contrast to his exaggerated silhouette.

Yong J. Yoon Public Service Commission, Washington, D.C.
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